• California Court Permits Employee Covered by CBA to Proceed in State Court on Wrongful Termination Claim
  • August 3, 2004 | Author: Helene J. Wasserman
  • Law Firm: Ford & Harrison LLP - Los Angeles Office
  • In a case with far-reaching ramifications for unionized employers, the California Court of Appeal for the Fifth Appellate District (Fresno) ruled that an employee who is covered by a Collective Bargaining Agreement (CBA) can still file a civil suit alleging wrongful termination. Haney v. Aramark Uniform Services, Inc. (7/12/04).

    Aramark provides towel, mat, uniform, etc. rentals to its customers. Haney was employed by Aramark. At all relevant times during his employment, Haney was covered by the CBA that was in effect between Aramark and Teamsters Local 431. The CBA had a "just cause" provision, requiring Aramark to have "just cause" prior to suspending or terminating its covered employees. Haney was terminated for overcharging customers, not reducing inventory when requested to do so by a customer, adding new merchandise without customer authorization, and not verifying inventory and lost garments with customers. Indeed, Aramark asserted that Haney's conduct placed one of Aramark's accounts in jeopardy. Local 431 filed a grievance on Haney's behalf, which ended in a deadlock. Local 431 indicated its intent to proceed with arbitration, but the arbitration was never completed.

    Haney filed suit against Aramark, asserting that he was discharged because he complained to management about Aramark's practice of overcharging and defrauding customers and because he refused to follow Aramark's practice of defrauding customers. Haney further asserted that he was terminated without good cause in violation of public policy and in violation of Aramark's policies and procedures. Aramark sought and obtained summary judgment on the basis that Haney's claim is preempted by federal labor law and did not assert an appropriate public policy.

    The Court of Appeal reversed. First, the Court analyzed whether Haney's claim is preempted by the National Labor Relations Act ("NLRA"). The Court examined whether Haney's purported conduct rose to the level of being concerted activity, protected by Section 7 of the NLRA. Because Haney's alleged conduct in complaining about alleged improper business practices neither stemmed from prior concerted activity nor was an attempt to bring about or prepare for group action, the Court analyzed whether Haney's conduct was acting "formally or informally" on behalf of a group. The Court found that he was not.

    The Court of Appeal then analyzed whether Haney's claim is preempted under Section 301 of the Labor Management Relations Act ("LMRA".) While noting that the preemptive scope of Section 301 has been construed broadly, the Court ultimately concluded that Haney's claim is not preempted. The Court analyzed the elements of a claim for wrongful discharge in violation of public policy, and held that a court can resolve the claim without interpreting the "just cause" language of the CBA.

    Finally, the Court addressed whether Haney's fraud allegations were sufficient to meet the public policy requirement essential to a claim for wrongful termination in violation of public policy. Haney referenced California Civil and Penal Code Sections addressing fraud and defrauding entities. Haney further asserted that Aramark's practice of defrauding customers constituted an unfair business practice under California Business and Professions Code Section 17200. Aramark asserted that, even if true, Haney's allegations would amount to nothing more than a breach of contract between Aramark and its customers. While finding no California authority on point, the Court held that Haney's allegations that he was terminated for complaining about and refusing to engage in fraudulent billing practices are sufficient to state a claim for wrongful termination in violation of public policy.

    Employer's Bottom Line -- This decision could greatly expand court litigation available to unionized employees who want to challenge their terminations.